The future of European agriculture

The European agriculture is much more regulated industry than, let's say, the U.S. one. The government has fundamental impact on the future of regulated market. The government, in this case, means the European Commission, the 'almost-federal-government' of the European Union. Its agriculture policy (called CAP, Common Agriculture Policy) will fundamentally changed after 2013, impacting the future of European agriculture and food business.

Current situation

The EU's Common Agriculture Policy (read a good summary on Wikipedia) goals "to provide farmers with a reasonable standard of living, consumers with quality food at fair prices and to preserve rural heritage." In other words: the CAP always have involved "off-business", environmental and social efforts, and this is behind the European food business protectionism. The CAP has 2 focuses: current or direct payments (DP) to farmers and the rural developments, which represent the major share of EU budget.

CAP post-2013: European Commission's proposals
The European Commission realized the need for a reform in CAP. The CAP reform has 3 objectives:

#1 enhanced competitiveness: The Commission would like to finish some old school protectionism: eliminate production limits (e.g: for sugar) and certain aid schemes, would like to improve food supply chain positions (e.g: enforcing producer organizations), and increase funding for some programmes like school milk and fruit programmes.

#2 improved sustainability: The 'almost-federal-government' proposes a redistribution in direct payments, and tries "to green" DPs. "Green payment" goals to diversify crop production, enlarge permanent grassland, and introduce some ecological focus areas. The proposal is about a 30% green share of direct payments. Improving sustainability also means a 'young farmer programme' for <40 years farmer.

#3 greater effectiveness: The Commission would like to emphasize much better the importance of effective agriculture policy. For this purpose, it tries to shorten food supply chains, implement local promotions, and support producer groups and organic farming. The advisory services and business development support for young/small farmers also goals a better usage of agruculture budget.

The following presentation is the official communication of European Commission about the CAP 2014-20 reform:

European agriculture policy 2014-2020 from Balazs Csorjan dr.

Conclusions

The European food market is one of the most (over?)regulated markets - and unfortunatelly it won't be much easier to entry to EU food market in the future. It will be greener, more organic, more effective, but, if you are a non-EU food seller, it will be challenging also in the future to entry this market. One option is to launch a new food production facility, let's say, in the low-cost Eastern Europe.

Or, if you had any better ideas, we were more than happy if you share it with us.